Things to remember on the 2020/21 tax return
January is the busiest time of the year for tax return filing. In the rush to get the return in it's easy to overlook things. What particular considerations need to be made when filing the 2020/21 return?
2020/21
The pandemic cast a long shadow over the 2020/21 tax year. With many businesses suffering drastically reduced turnover, this will have a knock-on effect on the tax return. January filing has a tendancy to get frantic as it is. But there are some specific coronavirus-related considerations required for 2020/21.
Grants
A business may have received grant payments, for example under the Self-Employment Income Support Scheme (SEISS). These payments must be included as taxable income on the tax return. It is the first three tranches of the SEISS that need to be reported in 2020/21. Tranches four and five will need to go onto 2021/22.The income should be reported in the correct place. There are specific boxes on the return for SEISS income. It should not be included as “other income” or just added to profits, as this could lead to double taxation.
If individuals are self-employed and have made losses, they may be able to take advantage of the temporary extension to loss relief. Once they have maximised sideways loss relief, they can carry back any excess losses against profits of the same trade for up to three tax years.
They need to have either made a sideways loss relief claim, or have a qualifying trade, but no income to utilise a sideways relief claim.
Business owners should eview bad debts and ensure any that are genuinely irrecoverable have been correctly written off. Employees should check to ensure they have claimed any allowances they are entitled to, for example for working from home where they have been required to do so by the employer.
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